Casinos Bet on Bustamante and McClintock

Native Americans donate heavily to the pair while criticizing Schwarzenegger, who favors taxing the gambling industry.

SACRAMENTO — In no time at all, they have established California's fastest growing industry and have become a powerful force in statehouse politics. Now the state's fabulously prosperous casino tribes are the major players in a historic campaign drama: the gubernatorial recall.

Having contributed or spent $11.1 million in the recall campaign, the tribes have much at stake in the contest to determine who sits in the Capitol's big corner office.

The next governor will play a pivotal role in deciding the future of the $5-billion tribal casino industry, while shaping the debate over how much gambling revenue tribes should share with the state.

California's most powerful gambling tribes have put their money squarely behind the candidacies of Lt. Gov. Cruz Bustamante, a Democrat, and state Sen. Tom McClintock, a Republican from Thousand Oaks. Some have reaffirmed their support of Gov. Gray Davis.

In statements from the campaign trail and written responses to a series of questions from The Times, all three politicians make it clear that they regard the tribes as sovereign powers best treated with respect. Tribal gambling, they say, has been a boon to the state, creating an entirely new job sector while improving the lives of long-impoverished Native Americans.

If the tribes have a public enemy, it is Arnold Schwarzenegger.

The Republican front-runner has drawn anger by calling tribes "special interests" and criticizing them for not paying taxes on profits. Last week, Schwarzenegger lashed out in a TV advertisement spotlighting huge tribal donations.

To counter that campaign assault, the tribes have launched an all-fronts war to keep Schwarzenegger from becoming governor.

Mark Macarro, chairman of the Pechanga Band of Luiseno Indians, called Schwarzenegger's advertisement an "act of desperation by team Arnold." He noted that the Schwarzenegger campaign includes Bob White and Sean Walsh, aides to former Gov. Pete Wilson, whom Macarro called "an enemy of Indian gaming."

Macarro also said that Schwarzenegger is "clearly out of sync" with the 68% of California voters who supported Proposition 1A, the Indian gaming initiative that voters approved in 2000.

Most of the tribal campaign spending has come from the Pechanga band and three other tribes that control major Southern California casinos. They have bought large chunks of television time -- nearly $3-million worth of ads to run about two weeks -- for ads praising Bustamante or encouraging conservatives to cast their ballots for McClintock.

The Morongo Band of Mission Indians, which operates a sprawling casino on Interstate 10 near Palm Springs, paid for $2-million worth of television time last week for commercials on McClintock's behalf. That is more than triple the sum McClintock spent on television and radio spots through Sept. 20, the cutoff date for candidates' last complete campaign finance filings before the election.

The Pechanga band, which has a casino near Temecula, has joined with the Sycuan Band of Kumeyaay Indians in San Diego County to spend $3.5 million on an absentee-ballot outreach campaign and a round of anti-Schwarzenegger TV spots.

Schwarzenegger said in written responses to questions from The Times that he has serious concerns about the effects of tribal gambling on California.

He also criticized Davis for negotiating a deal with the tribes that Schwarzenegger said failed to adequately reimburse the state and local governments for the drain casinos cause on government services, ranging from police and fire protection to roads and social services.

If elected, Schwarzenegger said, he wants to renegotiate every casino compact with an eye toward funneling more money into the state treasury. As a benchmark, he cited Connecticut, which gets 25% of the gambling revenue from its tribal casinos. In California, he said, that would mean between $1 billion and $2 billion a year for the state.

But Schwarzenegger left plenty of room for negotiation. Asked about the current cap of 2,000 slot machines allowed at each tribal casino, he said the state needed a "fresh approach." He said that, if he is elected, "everything is on the table."

Tribal gambling would get a far softer response from Davis, McClintock and Bustamante.

Bustamante noted that the two voter-approved initiatives that ultimately legalized Vegas-style gambling on reservations set no limits on slot machines.

He suggested that any cap should be "a subject for respectful negotiations" between the tribes and state. As sovereign nations, Bustamante said, tribes cannot be compelled to contribute anything to the state general fund.

McClintock suggested a strong free-market approach to the tribal casino industry, which experts predict could eventually overtake Las Vegas in scope and annual revenue. He said the current state compacts already cover the effect of casinos on the environment and local government services. And federal law prohibits taxing tribal casinos as a general revenue source, he said.